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There was intensive insider selling in Millennial Media (NYSE:MM) in October 2012 when the stock was trading above $15. The stock has been trending down since the intensive insider selling took place and is currently trading 50% below the October peak.

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With this episode in mind, I screened for stocks which have seen recent intensive insider selling. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

In this article, I will feature two stocks that met these three criteria of intensive insider selling in the last 30 days.

1. Intel Corporation (NASDAQ:INTC) designs, manufactures, and sells integrated digital technology platforms worldwide.

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Insider selling by insider (last 30 days)

  • David Perlmutter sold 535,000 shares on June 3, pursuant to a 10b5-1(c) plan. David Perlmutter currently holds 559,110 shares or less than 0.1% of the company. David Perlmutter is executive vice president, general manager of the Intel Architecture Group and chief product officer of Intel Corporation.
  • Thomas Kilroy sold 49,220 shares on June 3-4, pursuant to a 10b5-1(c) plan. Thomas Kilroy currently controls 75,194 shares or less than 0.1% of the company. Thomas Kilroy is executive vice president and general manager of Intel's Sales and Marketing Group.
  • Renee James sold 41,250 shares on June 3, pursuant to a 10b5-1(c) plan. Renee James currently holds 40,817 shares or less than 0.1% of the company. Renee James is president of Intel Corporation and, with the CEO, is part of the company's two-person Executive Office.
  • William Holt sold 175,551 shares on May 28 - June 4, pursuant to a 10b5-1(c) plan. William Holt currently holds 26,034 shares and 290,095 options or less than 0.1% of the company. William Holt is executive vice president and general manager of Intel Corporation's Technology and Manufacturing Group.

Insider selling by calendar month

Here is a table of Intel's insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
June 2013698,8830
May 2013407,4160
April 2013110,4610
March 201387,6920
February 201338,9280
January 201347,2470

The month of June has seen the most insider selling this year.

Financials

The company reported the first-quarter financial results on April 16, with the following highlights:

Revenue$12.6 billion
Net income$2.0 billion
Cash$17.1 billion
Debt$13.2 billion

Outlook

The company's second quarter guidance is as follows:

  • Revenue: $12.9 billion, plus or minus $500 million.
  • Gross margin percentage: 58 percent, plus or minus a couple percentage points.
  • R&D plus MG&A spending: approximately $4.7 billion.
  • Amortization of acquisition-related intangibles: approximately $70 million.
  • Impact of equity investments and interest and other: approximately zero.
  • Depreciation: approximately $1.7 billion.

The company's full year 2013 guidance is as follows:

  • Revenue: low single-digit percentage increase, unchanged from prior expectations.
  • Gross margin percentage: 60 percent, plus or minus a few percentage points, unchanged from prior expectations.
  • R&D plus MG&A spending: $18.9 billion, plus or minus $200 million, unchanged from prior expectations.
  • Amortization of acquisition-related intangibles: approximately $300 million, unchanged from prior expectations.
  • Depreciation: $6.8 billion, plus or minus $100 million, unchanged from prior expectations.
  • Tax Rate: approximately 27 percent for each of the remaining quarters of the year.
  • Full-year capital spending: $12.0 billion, plus or minus $500 million, down $1.0 billion from prior expectations.

Competition

Intel's competitors include Advanced Micro Devices (NASDAQ:AMD) and Texas Instruments (NASDAQ:TXN). Here is a table comparing these companies.

CompanyINTCAMDTXNIndustry Average (Semiconductor - Broad Line)
Market Cap:120.49B2.79B38.59B7.07B
Employees:105,00010,34034,15126.10K
Qtrly Rev Growth (yoy):-0.03-0.31-0.081.80
Revenue:53.02B4.92B12.59B3.74B
Gross Margin:0.600.340.490.34
EBITDA:21.15B-170.00M3.88B473.00M
Operating Margin:0.25-0.090.210.04
Net Income:10.31B-739.00M1.82BN/A
EPS:2.00-1.001.620.00
P/E:12.10N/A21.6461.99
PEG (5 yr expected):1.22-1.422.721.58
P/S:2.340.593.151.33

Intel is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

There have been four different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 0.10%. There are 17 analyst buy ratings, 24 neutral ratings and seven sell ratings with an average target price of $23.76. The stock is trading at a P/E ratio of 12.10 and a forward P/E ratio of 11.98. The company has a book value of $10.35 per share and the stock has a dividend yield of 3.72%. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are bearish analyst target prices, relatively high P/S ratio and the intensive insider selling activity.

2. Cigna Corporation (NYSE:CI), a health services organization, provides insurance and related products and services in the United States and internationally.

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Insider selling by insider (last 30 days)

  • David Cordani sold 58,705 shares on June 13, pursuant to a Rule 10b5-1 trading plan. David Cordani currently holds 203,007 shares or less than 0.1% of the company. David Cordani became President and Chief Executive Officer of Cigna Corporation in December 2009.
  • William Zollars sold 662 shares on June 12, and currently holds zero shares of the company. William Zollars has been a Director of Cigna since 2005.
  • Nicole Jones sold 15,306 shares on June 12, pursuant to a Rule 10b5-1 trading plan. Nicole Jones currently holds 6,867 shares or less than 0.1% of the company. Nicole Jones is Executive Vice President and General Counsel for Cigna.
  • Jane Henney sold 662 shares on June 10, pursuant to a Rule 10b5-1 trading plan. Jane Henney currently holds zero shares of the company. Jane Henney has been a Director of Cigna since 2004.
  • Matthew Manders sold 36,868 shares on June 10-12, pursuant to a Rule 10b5-1 trading plan. Matthew Manders currently holds 64,654 shares or less than 0.1% of the company. Matthew Manders is President of Regional and Operations.
  • Isaiah Harris sold 5,312 shares on June 5, pursuant to a Rule 10b5-1 trading plan. Isaiah Harris currently holds zero shares of the company. Isaiah Harris is Chairman of the Board.

Insider selling by calendar month

Here is a table of Cigna's insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
June 2013117,5150
May 201300
April 201300
March 2013152,1114,200
February 201300
January 20136,2500

There have been 275,876 shares sold and 4,200 shares purchased by the insiders this year.

Financials

The company reported the first-quarter financial results on May 2, with the following highlights:

Revenue$8.2 billion
Adjusted income from operations$497 million
Cash$3.4 billion
Debt$5.4 billion

Outlook

Cigna's outlook for full-year 2013 consolidated adjusted income from operations is in the range of $1.735 billion to $1.865 billion, or $6.00 to $6.45 per share.

Competition

Cigna's competitors include Aetna (NYSE:AET), UnitedHealth Group (NYSE:UNH) and WellPoint (WLP). Here is a table comparing these companies.

CompanyCIAETUNHWLP
Market Cap:19.76B19.82B65.08B23.27B
Employees:35,80035,000133,00043,500
Qtrly Rev Growth (yoy):0.210.070.110.15
Revenue:30.55B37.22B113.68B63.98B
Gross Margin:0.380.270.270.22
EBITDA:3.49B3.54B10.01B5.44B
Operating Margin:0.100.080.080.07
Net Income:1.31B1.64B5.33B2.68B
EPS:4.534.845.138.48
P/E:15.2812.5612.439.14
PEG (5 yr expected):0.960.991.060.85
P/S:0.650.530.570.36

Cigna is trading at the highest P/S and P/E ratios among these four companies.

My analysis

There have been six different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 0.30%. The stock is trading at a P/E ratio of 15.28 and a forward P/E ratio of 9.82. The company has a book value of $34.04 per share and the stock has a dividend yield of 0.06%. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio and the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in MM over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: 1 Tech Stock And 1 Healthcare Company With Recent Intensive Insider Selling